What is the most common reason for the large tax liabilities that force taxpayers to file Offers in Compromise?
Large tax liabilities are generally caused by unpaid withholding taxes. Owners and other responsible parties within a business are personally assessed the unpaid trust portion, or taxes actually deducted from the employees. This is called the 100 percent penalty assessment. If business owners cannot pay the full withholding tax, they should at least pay the trust portion-that amount withheld from employees-and designate that the payment be applied only to the trust portion liability. The business will owe its share of the payroll taxes due, but its officers and other responsible parties will have no personal liability. Other common reasons for filing an Offer In Compromise include extensive audits, not fling for a number of years or tax shelter investments that are disallowed.
Related Questions
- If someone were to grant a large personal loan to someone else (100K or larger) what are the tax liabilities or responsibilities of the lender and the borrower - if any?
- What is the most common reason for the large tax liabilities that force taxpayers to file Offers in Compromise?
- Do incorporated businesses commonly file Offers in Compromise?
